Indonesia eyes US$4.7bil in savings to brace for Mideast war impacts

2026-03-23 - 05:30

The Indonesian government has defended its fuel subsidy, which covers about 30% to 40% of the cost for consumers and represents around 15% of the budget. (AFP pic) JAKARTA: Indonesia is eyeing up to Rp80 trillion (US$4.7 billion) in savings to cushion its economy from the fallout of the war in the Middle East, according to the government. Southeast Asia’s largest economy is also mulling fuel-saving measures, including one day of remote working per week for government and certain public sector workers, as US-Israeli strikes on Iran and Tehran’s retaliatory response in the Gulf have sent global oil prices soaring. In an interview recorded last week, president Prabowo Subianto was asked about a possible shift in budget priorities for the country that heavily subsidises fuel for its population of just over 284 million. The former general said the government was “making every effort” to cut costs by curbing energy consumption and boosting production of renewables, mainly solar power. During the interview, presidential spokesman Prasetyo Hadi suggested the government is seeking savings of Rp80 trillion- a number confirmed to AFP by the presidency today. Prasetyo did not detail where the money would come from. The government has repeatedly insisted Prabowo’s signature free meals programme – budgeted at US$19.7 billion for 2026 – will remain untouched. It has also so far staunchly defended its fuel subsidy, which covers about 30% to 40% of the cost for consumers and represents around 15% of the budget. These form part of Prabowo’s goal to raise the economic growth rate from 5.1% last year to 8% by 2029, fuelled by public spending. Unlike many of its neighbours, Southeast Asia’s biggest economy has not yet seen long fuel queues as global oil prices have soared. “There are still many other cost-saving measures that we can implement,” Prabowo said in an interview with journalists and experts aired by local media over the weekend. The government will finalise its work-from-home policy and announce it to the public “as soon as possible”, Prasetyo said Saturday.